Who qualifies for a VHDA loan?

Category · Loan Programs

Published on September 10, 2019

Homeownership is a dream that many people feel is the unattainable goal. They worry that they do not have enough money in the bank or a high enough credit score to qualify for a home mortgage loan. In Virginia, dreams can become reality. You will be surprised by the many options and resources you have for reaching your goal of homeownership. A VHDA loan through First Savings Mortgage can help you become a first-time homeowner. First Savings Mortgage can help you discover if you qualify for a VHDA loan.

What is a VHDA Loan?

The Virginia Housing Development Authority (VHDA) is designed to help first-time homebuyers become first-time homeowners. This state-funded program can help you with finance a down payment, give you access to lower taxes or tax breaks, and provide you with access to an affordable 30-year fixed-rate mortgage. If you still need more assistance, you may also qualify for a Down Payment Assistance Grant through VHDA or a Mortgage Credit Certificate.

If you qualify for the grant, you will receive up to 2.5% of the purchase price, which can be used as a down payment. This grant does not need to be repaid, but a larger down payment will reduce your monthly mortgage cost. The Mortgage Credit Certificate provides you with up to 20% of annual mortgage interest for the life of your mortgage while you are living in the home. As an added bonus, when combined with a VHDA loan, it may not cost you anything to get started.

The VHDA was created in 1972 to help even lower-income families become homeowners, even if you have a credit score that is on the lower end of the scale. Beyond the financial options that it makes available to residents, it also provides educational resources through free homebuyer classes, support as it relates to housing, and more.

How to qualify for a VHDA Loan?

There are several different things that may impact whether you are eligible for a VHDA loan or if another housing option may be better suited to your unique situation. In order to qualify, you must:

1. Meet Financial Requirements:

It is recommended that you have some creditworthiness. This means that you hold a steady job with a reliable income source, have a minimum credit score of around 620 and a maximum debt-to-income ratio that does not exceed 45%.

However, you should also fall under the maximum income limit based on location and the number of people in your home. Your net worth also will be considered. You must not have a net worth of more than 50% of the property being financed.

2. Plan to Live in the Home:

A VHDA loan is for first-time homebuyers. Therefore, you must plan to reside in the residence you are applying for a loan to purchase as a first-time homeowner. Vacation homes will not be eligible.

3. Price of the Home:

There are limits to how much the home loan can cover. You should apply for assistance before you start shopping for a home to make sure you know your price limit.

4. First-Time Homeowner:

Although it is possible to receive help as a repeat homeowner, the VHDA is mostly designed for first-time buyers. This means that you must not have owned a home in the last three years.

5. Homeownership Education:

Before qualifying for any VHDA loan, you must be willing to take part in homebuyer's classes.

Things to Consider

There are many things for you to consider when buying a home. The requirements for a VHDA loan are at times negotiable, depending on whether you are hoping to buy in a Federally Targeted area. This may change the maximum loan amount and whether you must be a first-time homeowner or not. You may also qualify for other help and options if you are a veteran or have disabilities. If you would like to learn more about the requirements you can seek more information by visiting the VHDA for requirements.

If you are hoping to become a first-time homeowner, there are resources that can make it easier for you to reach your goals. The good news is, that these options maximize your opportunities. If you are unsure of what you may qualify for, First Savings Mortgage of DC can help. As a partner of the VHDA organization, their loan officers can help you understand where you stand.